Monthly Archives: November 2012

Amway income plan has hardly any expenditure listed on it! Is it, really possible to make money without investing time as well as money? No. So we should go through a process, where we understand how much it takes to become a 6% ‘qualified’ in Amway business. 6% pin level is supposed to be the stepping stone for success. Sooner you get it sooner your destiny can be reached. My up line had told me that in first 90 days, a new IBO should become an Eagle (three working legs earning six percent, 20 people in function and 10 Standing Order Tapes/Books – when I was an IBO). That can happen only if you become 6% by yourself in the first month. Of course I could not manage that even though I had 200+ personal PVs in one month, because sponsoring and getting new people to 100 PV in couple of weeks time is not that realistic.

I will talk in INR terms for currency and PV requirement is 300 to be called as six percenter. When I was an IBO, PV:BV ratio changed about 3 times. INR50 per PV (I had not signed up that time, but had the brochures with this ratio) became INR55 (when I actually signed up), then INR 60, and when I was leaving it became INR66. This increase by Amway was defended to make inflation adjustments so that you may have to work a little harder but you also get more income. So let us see how much is 300 PV worth, in simple multiplication mathematics it should be 300*66=INR19800. However, in the business plan no one tells you, or because it is a ‘unknown unknown’ for the prospects, that MRP-16%= DAP; DAP-12% tax = BV! That means 100PV will cost an IBO ~INR7700 and the actual business volume on which the commission calculated will be only ~INR6700! When you want to sell them, your price would be ~INR9300. When the plan was shown, first question would be how much is your monthly expenses on FMCG and consumables, and prospect would have told INR6000-INR8000, thinking about his food, grocery and regular household expenses. But if you look at the Amway products, it is only laundry and personal care products which will have cost per month of INR3000 if you buy luxurious necessities! Amway does not sell groceries and vegetables, INR8000 can never happen if you only change the shop but not adding products to your life. But you may end up buy unjustifiably expensive, skincare and supplements without which more than five hundred billion people on this planet live up till sixty years of age or more.

My assumption is the person who signs up for the business becomes core IBO in two weeks time (unrealistically positive)! Once an IBO is signed up he is expected to try all the products, in first two weeks of the business and you have spent ~INR7700 and if it was an individual only, you spent at least INR5000 out of your pocket! Let us assume he has signed up in the first week of the month itself, for simplicity. Now the IBO is trying to woo customers to make another 50PV and let us assume he succeeds, and he makes a profit of ~INR750. Meanwhile his references worked out and he finds three downlines in his LOS through his up line’s effort, which can happen in most cases. Let us assume it is in the second week of the business itself. So one of them puts all 100PV but the other two say that, they will buy products only after the salary! So new IBOs hopes get dashed! Let us move to next month, assuming that, he still remains core and wants to succeed in Amway. So he has to complete his 100PV by end of first week in the month, another ~INR7700 gone! Which means he has spent ~INR10000 without really having the necessity of consumption. Honestly speaking, none of the products bought in the previous month would have been finished. Still he has to buy!

In the next month he finds a couple more downlines, one to buy 100PV and other to buy 50PV but the person who bought 100PV last month is not buying anything because he is either – not interested, not having money, skeptical because he didn’t find anyone else, he just wants to sell some 50PV and then only will buy again, so on and so forth… But because this IBO already has personally bought 250PV in 6weeks in the business he can not buy for his personal usage anymore. Let us assume he finds another customer for 25PV and makes ~INR400 profit. But End of the month, runs out of money to get to 300PV. but ends again at 250PV second month complete. Let us assume, he has put in 15 hours a week for six weeks i.e. 90 hours and has also attended one BBS (business building seminar) and five open opportunity meetings and attended five home meetings in up lines house – in two months time this happens to any IBOs who are active; forget about the nine core steps are completely followed or not. In the second month he could have been advised to invest on some business building tools worth ~INR500 and also ~INR3000 for standing order program as per his trusted up line’s advise and with a goal to achieve Eagle qualification. All in all, this should add up to ~INR5000 including travelling charges and remind you 90hours effort.

In the third month, the core IBO is slightly worried because he has stocked up 175PV products and has only ~1150 profits to show. He does nothing and by the end of month somehow up line catches him to attend yet another major function and he spends ~INR2500 (does not buy a brand new suit for the function!). My up line used to tell me, after every major function, all core IBOs change pins. So, let us assume that, after the major function, this core IBO somehow sponsors four people afresh. In the following month, effectively fourth month after he signed up, and gets the IBOs in his LOS to do 200PV. With all his skill and effort, he manages to put another 150PV with retail profit of ~INR750. So he gets to 350PV and he receives 6% off ~INR23100 to make it ~INR1386 as Amway commission. We need to add the two more months of effort, so let us remain with Amway plan 12-15 hours a week, so another six weeks (assume he did nothing in two weeks before major function) 90 hours. After major function he attends four more open meetings, tries to help new IBOs and hence spends more on petrol etc., does buy at least ~INR1000 CDs and books to give to downlines.

Let us add the income first, ~INR750(first month)+~INR400(second month)+~INR750(fourth month) = ~INR1900 retail profits and add ~INR1386 from commission – let us assume best case scenario of INR3300 in revenue. He spent 90 hours in four months, in job he gets paid INR150 per hour so, let us assume his cost of time is ~INR13000. Excess consumption of products ~INR15000 and another ~INR12000 on tools, travelling expenses as listed above. So monetary investment of nearly INR30000 and return is INR3300 and they call it a business! Bu is there a fraction of asset which can yeild income in future? No.
What is so great Amway to begin with? Of course core IBOs know that nothing can happen in 12-15 hours of efforts in a week 🙂

This is the most vital step I would call where the teaching from affiliated education systems matter a lot. This where the raw-material of MLM comes from. Let us analyse how exactly a person who was ambitious to achieve something in his life with a great academic qualifications would end up getting tricked into MLM. There are two scenarios – one you get referred by your own friend/colleague/acquaintance; other one you were contacted in shopping mall, or while travelling or something like that.

Let us see what happens in the first scenario, which I can relate through the experience. I was a young and ambitious guy and I had colleague of mine who supposedly wore a smiling face all the time. He looked really nice to work with, he handled many difficult situations in the office, looked really matured, never involved in gossiping and he looked fantastic. His academic knowledge is phenomenal and many aspire to have, including me. He called me one-day telling me that, he has some work near to the place I stay in the city and he asked if he could come and speak with me on something important. I said ‘OK, you are welcome’. He came to the house, showed the 6-4-3 plan and started talking about people in Amway who retired at the age of 29, studied in world-class institutes and also who have had patents to their name in their respective careers. Showed some amazing (looking) product demos but asked me for sign up with Rs 4400 which I declined. He sold me a few products and after one year I signed up for Amway, knowingly and by then Amway had reduced the joining fees to Rs 995! He had told me, ‘why are wasting money by buying products as a customer but not pro-sumer?’ Looked sensible, but I missed the plot here. I didn’t take that seriously when I joined; but later, because of his trained people skills he could plug me into the system. Once an IBO who wants to make money gets into the system, he loses his mind and to an extent he forgets to ask questions – I didn’t ask many either. Why shouldn’t I trust a person whom I knew for two years?! Friends trust each other to get into MLM, sad but true. This is a typical way of getting tricked into Amway or MLM from a person whom you already knew and had trust with.

Let us see what happens in second scenario which is more often than that of the first one. Mostly you meet a sharp-looking person as part of their contacting. [This may apply when a friend of yours has joined Amway and has given his list contacts to his sponsoring/working up line]. You have a casual talk and end up exchanging contact numbers, and soon after numbers exchanged you may not see his head 🙂 Later on after couple of days, you receive a call which seems general but, as a prospect you do not know that it was trained set of sentences! Typically, the person (sponsoring IBO) will say, ‘I wanted to speak to you something specific, do you have a couple of minutes?’. Mostly you will say yeah go ahead, depending on the situation. He will either introduce himself with the qualifications and the job experience or simply start telling – ‘we, and a few like-minded friends working in IT industry (Indian scenario) are running a business along with our jobs without disturbing it, would like to expand the same with a few like-minded ambitious sharp people who also do not want to quit their jobs but to do some business to earn extra income. Would you be interested to know more on this?’.

You would typically respond, ‘Yes/No/More Info’. Again comes the ready made answer, ‘we are running an e-commerce/private franchising business, but even though we work in IT industry we do not do anything technical in it. We have affiliations to a few Fortune 500 companies, in retail, health care and banking industries.’ You typically ask ‘yeah but what is the investment’. Reply would come automatically ‘we are already very well capitalised, and hence we are not looking for an investment from your side’. You will generally ask what else is the thing, can’t understand. He will say, I didn’t call you if you will join hands but I called you to check your interest, I recommend we should meet and discuss, because we do not know whether our ideas match or not, we meeting does not have commitments from either side. So sensible it looks for prospect.

If it is home meeting you may get an invite as business presentation at his senior partner’s house or else you meet wherever convenient and mostly they avoid public places as it is difficult to show toothpaste and home care demo. When we go to the presentation, the presentation is designed to make you not to understand anything. Then in the plan more talk will be about concentrated products, Forbes listing, and some success stories. Your questions will be how can I make it. Some people make futile attempts, by asking ‘how much money do you make?’. And ready made, answers and people skills books give, ‘it is not about how much money I make, but it is about how much money you want to make. There are enough people who succeeded in this and you can meet successful people one-on-one’. But most of the questions are already driven by IBOs, so prospects ask only those where IBOs already have a ready made answers! Products expensive, etc will also have answers. IBOs generally have nice suiting, nice trustworthy smiles, speaking with assertiveness, and other people skill trainings ensure, prospects do not dare to ask profit and loss account or balance sheets of any Ambots.

Another reason for not asking for financial statements is, most of the prospects do not understand the practicalities of the business. When they’re encountered with these trained Ambots or MLM cults, they end up thinking about big dreams rather than practical business issues. Hope I have given some elementary insights about MLM recruiting tactics, and also hope that after reading this you get some solid thought process. I have nothing against Amway but ensure that you are not the one who repent joining it!

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In every counselling session biggest thing that was talked about was an ‘IBO being productive’. It was a sensible thing as success is associated with productivity. But later I realised that many things to not becôme part of being productive. Contacting, inviting For appointment, all education related time spent aren’t part of productivity! Let us check how many education related events do we have in Amway? Many of them – weekly open meeting, contacting, phone meeting,product awareness and system education weekly meetings, up line counselling at least twice a week, monthly BBS (business building seminars) twice a year FED(free enterprise day) and summer conferences, Amway arranged training a such as insurance and other product trainings, last but not the least ‘night owls’ from your uplines and any other things your LOS promotes. Such huge list of things associated with so much cost is not productive!
Now let us come to end of the calendar year mega function FED and the leader is the one who can promote it big time. I suggest all core IBOs also to spend some time with your family instead spending time shouting in yet another unproductive education meeting. Open google and search for one day holiday program in the nearest of your area and enjoy yourself. Because most of the IBOs who have committed their life for Amway I recommend you spend time with each other as a couple. No upline can give you back the time you spent in your life. If you have decided to be in Amway for ever it is fine, but do not do something which is not productive like attending meetings.
If you do not have any appointment with prospects just do not spend Rs 750 for each, and also travelling charges of another possibly Rs 1000 which should be added with possibly another Rs1000 for accommodation and food.
If someone is reading this post being a prospect or an IBO who has not attended any of the such events before I will tell you what is expected there. Mostly you will be thrilled by hospitality fro your up lines and other cross lines being a new comer. You may either go by train or a privately booked bus. When we went, no sleep at all as if to say all of us had achieved passive income and financial freedom. Then, even though it is a winter you are expected finish your routine and be there in the queue by as early as 6.30am! We were surprised to see our up line who was at the higher pin managed to come a little late as he had front row reserved being in higher pin. He earned that it seems. So sitting in the front row with a reservation is an achievement forget the money and time you spend to make that. Once you enter the auditorium you will be escorted to the nearest row available to the stage so that you can be a deaf by the time function gets over. So function will start with deafening cheers without any reasons. In fact there will dancing and shouting sessions by experts! There will be diamond parade with lots of slide shows of mansions and beaches of the world. Then various diamonds will either tell their own so called success stories or they will teach you how to do this business but it will same old nine core steps, cardinal rules and four basics. In between there will be a tools counter and you can buy more CDs and books to impress your upline and increase your credit card bill. So at the end of the function there will be thank you session possibly national anthem and so on. Looking at thousands of people shouting most prospects end up signing or if your an IBO you may devote more time in following couple of months.
At the end of the function your upline will hold a quick meeting. You can expect a ready made question “what did you like the most” and then “it is a very simple business, you saw The crowd right” and stuff like that. Trust me there was nothing productive there, and if you want to do Amway business also use your brain where is the direct correlation between efforts and returns. These functions will keep coming but you may not get your life back. I recommend you give real critical look before you decide agree for big function promos.

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I am not talking about the old story of Amway raids but the latest that happened on 9th November 2012, in Kerala state, India. Kerala has been quite stringent on MLM companies historically. When I was an IBO similar raids were conducted and it so happened that Amway abolished the joining fee and also changed PV activation rules. Of course they still have renewal fee in the form of Rs 480 (early renewals), Rs 795 (till December) and Rs 995 (late renewal). I have no idea what kind of issues were fixed when they abolished Rs 4500 odd joining cost. I have been hearing lots of pro and anti NMart stories and also problems faced by MonaVie. There were troubles for other MLM companies such as RCM and RMP. There should be more to the list but I do not know their names, but all in all India government is waking up and bureaucracy is at least taking complaints on fraudsters and dream sellers!

So if everything were legitimate in Amway, why so many alterations? Why a company’s senior members are booked in heavy offence cases? Ambots may have good defense for these let us wait and watch. The issue seems to be surrounding at an incident where an IBO was reportedly advised to buy hefty amount of products and returns weren’t accepted. I am not interested to go to the details at all. I remember in one of my previous posts I talked about the Amway propaganda of being right in MLM (they do not even want themselves to called an MLM company). Their India business cheif and several other pro Amway dignitories came boasting about Amway. So, it just says, someone coming on a TV channel and talking about direct selling business regulation does not mean they’re doing it the right way? I had pointed out that, there was no argument and counter argument kind of discussion but it looked like some topics were to be talked about moderator kept giving out the pointers for the participants to talk.

Amway has done that historically, ask no questions. Lights flashed, oozing screens and roaring people, first time entrants start believing that. Amway business is worth nothing, no assets created but the way it is boasted is so much that people sign up with amazement rather than like getting into a business. So the culture of ‘do not ask, just follow up line’ continues. Of course Amway has had government backing in various countries across the world but does that mean that, it is a legitimate option for life time, I doubt that. I honestly feel all kinds of MLM schemes are nightmares for the public and I heard once from my beloved shopkeeper – everyone else do cheat and it is known thing, but MLM and especially cheating is never documented well enough. I endorse the idea too. Personally I would like to see my great retired up lines coming back in the queue for jobs especially standing in open interviews, what a scene that would be 🙂 Meanwhile, I noticed no improvements of Pin levels for my former working up line and so all the best for a great ambitious couple.

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Every now and then we see new products launched and lots of IBOs push hard for themselves and their team to ensure they have the latest offer at their shelf for self use and retail. It is indeed a great opportunity from a consumer perspective most of the time. However, all the offers do not increase product quantity for the same price, even though sometimes they do. The offers would also include a gift item which may or may not be useful for a particular IBO. But mostly, everyone is expected to have multiple number of products at home in the first week of launch.

I have no grudge against the company policy but I have problems with the way it is handled by LOS up lines on their downlines. Most of the up lines force their downlines to buy at least three pieces of products on each offer. Let us say there are offers launching by second week of the month, usually it happens during the second week only, IBOs are expected to buy. However, by first week every IBO is expected complete his personal 100 PV. The new offer products are told to be bought if you want to show your downlines as core. That should account for about 50 PV or even more, and you had already “put” your 100 PV in the beginning of the month. That considering the fact that, the existing products must at least last for more than couple of months you need to find customers to buy worth 150 PV. Quite understandable. But when a retail is completed you need to replace the products on your shelf! That means you buy again for anything that was sold to retail customers.

Then comes month end, and there is a goal to fight for. It may not be your own goal, it might be your LOS up line goal that you’re fighting for. Let us say he needs to re-qualify his 10,000 PV and he is short by 1500 on the last day of the month. I got a call in many months on or about 10 PM of the last day asking to put PVs. Many foolish IBOs, including myself, would belive that, someone else will also do for them. So “put” PV again. How much is the amount? I do not know but it could be about Rs 5,000-Rs 10,000! Without having any customer and literally no requirements to buy for themselves faithful IBOs put PVs and money with a blind hope of someone else replicating. When such things happen to IBOs, let us say next two months they fail to hit their own PV goal then comes mental trauma. What else do I need to do to succeed? This question was answered by my up line saying – ‘you’re on the right track, just keep doing the same, more and more’. Products will have offers, but IBOs need to use their brains while they swipe their credit cards.

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Here we go! Once again, time for changing your time and business 🙂 Here comes the Free Enterprise Day, to be conducted across India and I suppose around the world, November and December months of the year. I understand that, in India, the FED will be conducted in multiple places. So for all core IBOs, you have a chance to impress your up line (and lose more money) by attending more than one FED in various states. Meanwhile, I will take you through the FED alternatives in my coming posts. Let us discuss about the merchandise to be sold through systems. So first thing’s first, once you’re signed up in the business, you’re expected to do whatever systems preach you!

I was told that, founder of the system did certain things, and he became ‘multi-millionaire’ if you want to become one like him, copy exactly what he does or follow what he preaches. I was expected to buy a very expensive file-folder because I could make better impression. Then I was supposed to buy yellow pad and red-ink pen only to show the Amway business plan to prospects. Don’t ask why for anything, because it is quite easier to copy and follow your up lines rather than re-inventing the wheels – was the answer. Always wear red tie! This was stupid and I never thought I should do that, now I laugh at that, because I did not wear red-tie I wasn’t an Amway success 🙂 You should be wearing the best of the best clothes – always formal wear – at any given point of the day, which was also ridiculous. In fact, I was expected to dress exactly similar to my LOS up lines – if they wear casual and you wear formal clothes, then you’re not core enough. Biggest thing that was propagated to all downlines included – you can get thousands of downlines for yourself but you can get only one up line, and do what pleases him because your success is his success and hence he would never advise anything that can harm you or your business.

So all the above points noted are very important for Free Enterprise Day, why, because along with usual tools of the business, Books and CDs you should be surprised, if you do not see any or all of the following – expensive shirts, tie, even t-shirts and caps – for your up line counselling sessions, then yellow pads, red-ink pens everything you need for the routine! Such a shame, the system was supposed to be playing a support role, helping out the new IBOs. But they have tool business, suspected to have profit sharing also and they are into merchandise selling. I know many entertainment companies do sell merchandise like t-shirts and caps, but no idea when did these systems include such objectives. I have no business to stop anyone from joining Amway but I advise you to be wiser in terms of picking the stuff from tools counter. Oh, forgot, what is the name of the function – FED that is free enterprise day! Then why a free entrepreneur or Independent Business Owner has to buy and do things to please some up line who initially met you in a restaurant, during travel or in shopping mall as part of contacting? Can you please answer me that after you attend one or more FED’s in coming months? I thought everyone was independent and free – but it does look like a slavery in the free enterprise!